Trusts in Brokerage Firms

When you think of trusts, you probably think bank, private bank.  And yes, banks have a lot of personal trust assets. The Bank of America has over $125 billion,  Wells Fargo has $62B, PNC Bank has $38B, and JP Morgan Chase has $28B in personal trust assets.

But times they are a changing and so is the source of wealth which is most likely to come from an individual's own efforts than from inherited wealth.  That, coupled with dissatisfaction with the performance of many banks, has led many people to brokerage firms,

Today, brokerage firms have a 32% market share of institutional and personal trust business, up from 5% in 1991.

Many banks have been slow in coordinating the various departments involved in asset management. Mergers disrupt long-standing relationships between upscale customers and personal trust officers. These factors create two distinct advantages for brokerage firms. First, an increasing amount of US wealth involves “first generation” money; the emerging affluent crowd is heavily populated by entrepreneurial business owners and corporate executives. Second, younger consumers prefer integrated and automated services and view regional brokerage offices as a reasonable substitute for bank branches.

Source.  Tiburon Strategic Advisors, Report on Leading Distribution Channels, July 8, 2005